German DIW institute calls on ECB to cut rates

EmilyChurch

LONDON (CBS.MW) -- A leading economic institute in Germany, the DIW, Tuesday called on the ECB to cut rates to spark demand at home and offset the gains in the euro. "A rate cut would make sense against the background of the recent appreciation in the euro," the DIW said, according to AFX. "The ECB should at least signal its preparedness to leave rates at their present low level for the foreseeable future," DIW said. The DIW forecasts euroland growth at 1.7 percent this year, rising to 2.1 percent in 2005. Separately, currency analysts still remained doubtful of an ECB intervention. "We are pretty sure that, if our call for $1.40 this year comes to fruition, German exporters will be screaming for mercy," Bear Stearns said. "However, we do not think that the ECB will be able to deliver any intervention that is effective and, what's more, do not expect the Bank to try - at least for the foreseeable future."

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